KUALA LUMPUR (Feb 18): Two of the largest rubber glove makers in the world saw their counters' intra-day short-selling (IDSS) suspended by Bursa Malaysia on Tuesday after their share prices fell to multiple month lows. 

Shares of Hartalega Holdings Bhd (KL:HARTA) fell as much as 79 sen, or 23.2%, to close at RM2.61 on Tuesday, its lowest since Sept 11, 2024, after the nitrile glove manufacturer reported a 12.8% decline in net profit for the third financial quarter ended Dec 31, 2024 (3QFY2025).

At RM2.61, the company’s market capitalisation stood at RM8.95 billion.

This prompted Bursa Malaysia to suspend the IDSS of Hartalega’s shares for the rest of the day. Hartalega saw some 93.79 million shares change hands, significantly higher than its four-week average volume of 3.50 million shares.

Meanwhile, Kossan Rubber Industries Bhd (KL:KOSSAN) saw its share price drop 38 sen or 16.17% to close at RM1.97 on Tuesday, the lowest since Oct 7, 2024. This also prompted Bursa Malaysia to suspend the IDSS of its shares.

According to an analyst covering Hartalega, the market sell-off was triggered shortly after the company’s earnings conference call — which ended at 3.30pm — with large funds seen selling off their positions.

During the call, Hartalega provided a lacklustre outlook for the rest of the year, dampening investor sentiment.

“If you look at the share price, it was still holding up well at around RM3.40 after the results were released when the market reopened at 2.30pm. But once the guidance was shared during the call, panic selling began,” the analyst told The Edge.

For the cumulative nine-month period (9MFY2025), Hartalega posted a net profit of RM60.06 million, compared to a net loss of RM2.39 million a year ago, on the back of a 51% increase in revenue to RM1.97 billion from RM1.31 billion in 9MFY2024.

The nine-month net profit came in at only 36.2% of the consensus full-year estimates of RM165.99 million, according to Bloomberg.

The weaker guidance was said to be due to US customers front-loading their orders in the fourth quarter of calendar year 2024, which is expected to result in lower sales volumes for the first quarter of 2025.

It was also noted that the rapid capacity expansion by Chinese glovemakers may also negatively affect Hartalega's sales volume.

“The management cited that the front-loading effect was a major factor, which will impact sales volume for the coming quarters,” the analyst noted.

While the company reported a 77.6% year-on-year growth in quarterly revenue, the analyst highlighted that it was largely due to a low base effect from the prior year, when the industry was still struggling with an oversupply issue.

"Quarter-on-quarter, however, the revenue growth is showing signs of slowing down," the analyst said.

On valuation, the analyst commented that at RM2.61, Hartalega was trading at about two times its book value, which is still slightly above the mean but at a more reasonable level.

“I expect the share price may retrace further after the March reporting season if the sales volume outlook remains weak and guidance remains uninspiring,” the analyst said.

“The front-loading issue seems to be a one-off event and could be resolved by May or June this year. With tariff benefits still intact, I wouldn’t jump the gun to downgrade further at this point,” the analyst added.

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Hartalega's 3Q net profit down 13% on higher operating expenses; shares slip to three-month low